Sponsored Links
Australia's medium term prospects remain good, with various policy measures being effective in supporting domestic demand, Reserve Bank of Australia Governor Glenn Stevens said Monday. He also noted that the central bank may raise interest rates as the economic recovery continues.
In his opening statement to the Senate Economics References Committee, Stevens said the recession in Australia was mild in comparison to those seen in the 1970s, and in the early 1980s and 1990s, and was also better than outcomes seen in other countries. The economy contracted 0.7% in the final quarter of 2008 and managed to avoid a recession by growing 0.4% in the first quarter of this year. In the second quarter, the economy grew 0.6%.
The governor said various economic indicators have shown improvements in recent months, like business and household confidence, which showed substantial pick up from their low points. Moreover, house prices were rising, and the share market was also showing increases. "People are realizing that, though things have been tough, the worst has not occurred and the future is looking brighter", he said.
On the external front too, the Australian economy was doing well, with terms of trade remaining high by historical standards and exports growth supported by demand for resources. Further, the country's other Asian trading partners have also been performing well, he said.
Stevens said in recent months the economic growth forecasts have been revised up to reflect the effectiveness of the various policy measures in supporting demand. He said the peak effect of the various stimulus measures have probably passed now, and the extent of the support would be decreased further over the next year, if private demand shows an increase.
"In the case of monetary policy, the Bank has already signaled that interest rates can be expected, at some point, to move off their current unusually low levels, as recovery proceeds," Stevens said. The RBA lowered its key interest rate by a record 4.25 percentage points between September and April to bring the rate to its current level of 3%. The central bank chief said he is extremely pleased and fortunate to not to cut official interest rates to zero per cent.
At present the recovery is broadly in line with the central bank's expectations, Stevens said and noted that in this case the fiscal and monetary policy were acting broadly consistently, as they did when they moved into expansionary mode when the economy was slowing. According to him, a certain amount of policy discipline would be required now.
On the fiscal side, the governor said restraint was needed to bring back budget to balance and eventually a surplus, as required by the medium term fiscal commitment. On September 18, Australia's treasurer Wayne Swan said the country's budget balance would return to a surplus by 2016.
The inflation target band would help to guide the interest rates, Stevens said. "These will be timely and ahead of a build-up of imbalances that would occur if interest rates were kept low for too long", he added.
0 komentar:
Post a Comment